Household consumption and the discrepancy between economic and subjective poverty: The mediating roles of perceived social status and social connectedness

Abstract

<p>This study examines the influence of conspicuous and experiential consumption on the discrepancy between economic and subjective poverty as well as the potential mechanisms for any such discrepancy. Conspicuous consumption describes the purchase of goods to display social status and economic power, while experiential consumption describes purchases made primarily to acquire a life experience. Cross-sectional data were drawn from the first wave (2015) of the Hong Kong Panel Survey for Poverty Alleviation (n = 1752). Ten consumption categories (food, utilities, necessities, rent, mortgage, communication, transportation, education, health, and leisure) were classified as either conspicuous (experiential) or non-conspicuous (non-experiential) consumption. Logistic regression showed that expenditure on leisure, which falls into both conspicuous and experiential consumption, increased the probability of feeling non-poor among the economically poor and, conversely, reduced the probability of feeling poor among the economically non-poor. Multiple mediation analysis further revealed that these relationships were mediated by self-perceived social status (conspicuous consumption pathway) but not by social connectedness (experiential consumption pathway). The findings confirm that the way people spend their money shapes their perceptions of poverty, which may deviate from their poverty status as measured by economic criteria. By enhancing self-perceived social status, conspicuous consumption reduces subjective poverty for both the economically poor and the non-poor.<br></p>